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5 Benefits of Investing in Multi-family Properties

The multi-family investment space is one of the several strategies a real estate investor can choose for consistent cash flow. Below in this article is five of the many benefits that a multifamily investor gets with their purchase.

Third Party Management Companies

Some real estate investors do not enjoy managing a property on their own. And instead, they prefer hiring a management company to do the hard jobs for them. Management companies are usually paid an agreed upon percentage of the monthly income generated by the property. They are responsible for handling the daily operations of a property, finding and screening tenants, collecting rents, handling eviction, and anything else in that realm. Because of the monthly income generated by a multi-family property, hiring a property management company to manage your multi-family property is financially viable.

Building Portfolio is Easy and Quick

Another benefit of investing in multi-family property is that it can help build your portfolio easily and quickly. Buying a 50-unit apartment building is much easier than buying 50 single-family properties in different locations. An investor who wishes to build a portfolio of rental units within a certain period can go into the multi-family investment space. Since the multi-family property is easier to acquire, manage and finance, an investor interested in building a portfolio quickly can focus on this type of investment.

Property Value and Performance Can Be Controlled

Forcing appreciation is one of the benefits of multi-family investments. An investor has control over his asset. Also, the change in the property’s value is not always tied to the economy. That means that any simple improvement or rehab work done on any part of a multi-family property will improve the value of all the units in the apartment. Changing the roof of a 10-unit apartment building, for example, can increase the value of the entire unit and raise the monthly ROI on the property. Whereas, changing the roof of a single-family home will only increase the value of one unit.

Efficiency of Scale

Another advantage of investing in this type of property is the ease of doing things like negotiating better discounts, ease of managing the property and the reduced labor involved. An apartment with 50 units can be easily managed compared to 50 single-family properties located in different locations. Moreover, the maintenance cost is reduced because you are doing things in bulk compared to single-family investment.

Spreading Risk over more Units

A multi-family investment property helps to reduce the risk of running into foreclosure. If you have a 6-unit apartment building and two units were vacant for four months, you still have four units to cover your expenses. Therefore, a multi-family property investor has a very low tendency to default because the expenses spread over multiple units. Moreover, this type of property produces a consistent, passive cash flow for the investor.

Bottom Line

Investing in multi-family space is historically proven as one of the best ways to accumulate wealth. If you’re still looking for the best strategy, we recommend investing in multi-family and stop missing out!